It’s been a year since The Magical Crypto Friends have established an ad-hoc assembly in order to educate the public against the numerous attempts to overtake Bitcoin, and their commitment to the cause has been constant and seemingly-relentless. What started as an informative video podcast which slams SegWit2X, Bitcoin Cash (which is often referred to as “Bcash”) and provides updates about scaling developments for BTC (from SegWit adoption to the Lightning Network and Liquid) has expanded to cover many other topics in the space.
Whale Panda, Fluffy Pony (Riccardo Spagni), Excellion (Samson Mow), and Chikun (Charlie Lee) are the four anthropomorphic characters who voice their opinions in a manner that’s both educational and humorous, for a purpose which is divisive in its very nature: depending on the side of the scaling debate you find yourself on, you can either admire their commitment to decentralization and security, or dismiss them as proponents of the Blockstream monolith who drive the well-fuelled propaganda machine. Regardless of your understanding of the situation, the show is a cult hit within the Bitcoin community and there are plenty of reasons to watch it even if you find points of disagreement.
The latest episode, launched on October 12th, is the meritorious anniversary celebration of Magical Crypto Friends – but instead of recapping the accomplishments of the last 12 months, it remains true to the original spirit and discusses some of the most interesting developments that happened since the last four friends last assembled.
The Baltic Honeybadger Conference and the B Foundation
Bitcoin trader Whale Panda, who appears to get laughed at for his accented English, proposes an unusual discussion topic: The Honeybadger Conference, which took place in Riga between September 22nd and 23rd, 2018. The event usually gathers around important Bitcoin developers, and names like Jameson Lopp, Elizabeth Stark, and Adam Back receive worthy mentions. However, Whale Panda appears to be the only one who attended the event and briefly tells a story about his experiences.
However, the centerpiece of the event is the launch of the B Foundation: an initiative which aims to provide financial support to future Bitcoin developers, as a way of securing the future of the technology. Naturally, the discussion between the four anthropomorphic animals focuses on the connotations of the word “foundation”. The community already has a bad memory of the events which took place the last time when an organization tried to gain legitimacy as a representative of Bitcoin, and the general consensus is that referring to the new initiative as something else other than “The B” can take undesired turns. Additionally, it should be noted that The B (Foundation) doesn’t aim to represent the community or the project as a whole and hasn’t established any lobbying purposes.
Whale Panda argues that The B is a great initiative because it expands the community and scouts for new talents. In his assessment, he presents the example of Ethereum which, despite not managing to live up to the expectations as a protocol, has recruited young and skilled developers by going to universities and offering grants. Samson Mow jokes that the argument sounded like a well-rehearsed speech and criticizes the inclusion of the word “Foundation” by referring to the backlash of the community. Charlie Lee adds that if the name was such a rushed last-minute decision, then it should be able to receive a change or rebranding just as easily.
Naturally, the argument gets turned into a joke and then it’s extrapolated towards the cases of Litecoin and Monero. Samson proposes the name “Magical Crypto Foundation”, the idea of trademarking the word “Magical” for every new project gets pitched, and then another wave of criticism for the Bitcoin Foundation concludes the brainstorming process. When they reveal that the defunct foundation has Ethereum reserves, they laugh and Charlie Lee confesses that the Litecoin Foundation itself holds some Bitcoin – but in this case, the consensus is that the move actually makes sense from a financial perspective.
The Bitcoin inflation bug and the Monero bugs
One of the biggest issues that Bitcoin has had lately revolves around the inflation bug of late September 2018. The biggest issue was that the developers didn’t know how to act in an efficient way which preserves the security of the system, as they discovered a bug which could be exploited to mine more bitcoins than the programmed cap of 21 million, but presented it as a problem that can shut down nodes. It wasn’t until more careful scrutiny by other developers and the release of a full disclosure that the situation got really tense, but the concerns over exploits were legitimate.
Such vulnerabilities are the worst possible for Bitcoin, as part of the attraction of the protocol’s underlying cryptocurrency is that the supply is fixed to 21 million. In the event of an unexpected and unwanted supply inflation, the credibility of the system can collapse and years of building a narrative of digital gold and sound money can suffer a major hit. Fortunately, the developers were cautious and fixed the bug before anyone could take advantage of it. The problem is that trust issues emerged and the scenario only proved that the Bitcoin Core developers are terrible at public relations and communication.
Charlie Lee explained the case in more technical terms and said that vulnerability was caused by transactions not checking to see if an input is spent in a block twice. These transactions, despite getting rejected by the network, could find their way into a block which other clients validated. And if a malevolent miner found the bug, it could purposely create more coins by double-spending the same output. Thankfully, the developers proved themselves to be faster and more competent than the potential ingenuity of miners and the fix has been released on time. Most coins which rely on the same architecture (such as Litecoin) have already updated, but Pidgeoncoin has suffered an attack which took advantage of the issue.
Riccardo Spagni also tells his side of the story by comparing the situation to the bugs he’s encountered in the Monero code. Firstly, he had to deal with a situation which led to the emergence of plenty of Monero clones that can easily attack each other. The challenge was to patch your network and then reveal the fix to others in a way which doesn’t encourage attacks based on possessing more information than the others. Fluffy Pony reveals that, despite presenting the patch to all the parties 2 weeks prior to a planned hard fork, those coins still ended up attacking each other.
However, the trickiest challenge which Mr. Spagni reveals concerns a situation where malevolent actors used social engineering to gain access to exchanges and, through a series of transactions, burn some of the coins so that they become untradable. This in itself is an attack to the liquidity and fungibility quality of Monero and it was fixed through a patch which was easier to implement than the previous one against attacks between forks.
EOS Block Producers
EOS’ dPoS governance has previously found itself under scrutiny throughout the recent episodes of Magical Crypto Friends. In a nutshell, there are 21 block producers who basically function as curators who decide what should and what shouldn’t be included within the blocks of their system. It’s meant to be a centralizing compromise which prioritizes scalability and ease of dApp implementation, but ends up replicating the same hierarchic and oppressive banking system that cryotocurrencies were created to counter.
In this regard, Whale Panda presents the issue of Chinese block producers who vote for each other in order to get more power and earn more coins. In this federated blockchain structure, the producers get elected by users. The biggest problem is that exchanges end up amassing a lot of power and the system becomes oligarchic and perpetually exploitable by those who become influential and powerful. In itself, this is a human flaw which leads to corruption – or as Charlie Lee presents it, we’re dealing with pure game theory where participants are financially incentivized to be dishonest and establish voting cartels.
Riccardo Spagni jokes about participants not respecting the constitution (which is the name of the EOS’ 18-point fundamental governance principles), and then the discussion is inevitably swerved towards Ethereum and how BlockOne’s project is actually a serious contender for the “Ethereum Killer” position. In the true spirit of the show, Whale Panda and Samson Mow mention that smart contracts can also get built on Bitcoin, and in the end, we might see this type of development becoming more popular on the objectively more secure and decentralized blockchain. Riccardo Spagni adds that they should only be settled on chain, but secured on a sidechain which better manages the entire process without creating congestion.
— BREAKERMAG (@BreakerMag) October 15, 2018
Interesting takeaways from the questions section
- Whale Panda considers that Monero is more useful than Litecoin and holds a greater amount of the former than of the latter (but admittedly owns both)
- Charlie Lee and his developers don’t plan to fork Samourai Wallet anytime soon, but given the similarities between Bitcoin and Litecoin, the project should be easy to implement and deliver something useful to the community.
- Fluffy Pony has no idea what the next Monero hard fork is going to do, and the final decision is made by the community. The only priority of the project, as established by precedent, it to make the coin ASIC-resistant.
- All Magical Crypto Friends are Bitcoin maximalists at heart, understand the underlying value of Satoshi’s project and its potential for the future, but simultaneously look up to other projects which include Litecoin and Monero.
- Bitcoin is more Austrian than Keynesian and the priority shouldn’t be the ease of spending, but the security of the assets.
- Liquid Network, which wasn’t released yet when the show was recorded, is unanimously anticipated and appreciated by the four anthropomorphic friends.
- Fluffy Pony thinks Hublot watches are awful, aren’t very precise, and don’t hold their value in time.